Avery Dennison reported a loss per share of $0.07 for Q4 2005 compared to a profit of $0.83 per share in Q4 2004. The loss was due to restructuring charges and divestitures. Excluding these, earnings per share were $0.92. For the full year, earnings per share were $2.25 compared to $2.78 in 2004. The company expects 2006 earnings per share between $3.45-$3.80.

1. News Release
___________________________________________________________________
Miller Corporate Center
Media Relations: For Immediate Release
Charles E. Coleman (626) 304-2014
communications@averydennison.com
Investor Relations:
Cynthia S. Guenther (626) 304-2204
investorcom@averydennison.com
AVERY DENNISON REPORTS
TH
4 QUARTER AND YEAR-END 2005 RESULTS
PASADENA, Calif. – January 24, 2006 – Avery Dennison Corporation
(NYSE:AVY) today reported a loss for the fourth quarter of $0.07 per share on a fully
diluted basis, compared with fully diluted earnings per share of $0.83 a year ago.
Reported results included the impact of previously announced restructuring actions,
product line divestitures and discontinued operations, as well as the effects of a legal
accrual related to a patent lawsuit and gain on sale of a leased asset. Excluding
these costs, fourth quarter diluted earnings per share were $0.92 compared with
$0.83 a year ago, above the Company’s guidance for the quarter. (See Attachment
A-3: “Preliminary Reconciliation of GAAP to Non-GAAP Measures”.)
Compared to the prior year fourth quarter, earnings before restructuring and
divestiture-related charges increased on lower sales due to improved profitability,
primarily related to reductions in operating expense and the tax rate. Severance and
non-cash charges associated with the restructuring actions and divestitures totaled
$130 million before tax in the fourth quarter, or $98 million after tax.
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2. 2-2-2
quot;We made significant progress in 2005 to improve the profitability of our
businesses,” said Dean A. Scarborough, president and chief executive officer of
Avery Dennison. “The charges that reduced fourth quarter reported earnings reflect
our steps to fine-tune our portfolio and improve our global operating efficiencies.
These actions will enhance our ability to meet both our top-line growth and margin
improvement objectives.”
Pre-tax charges associated with restructuring actions include $28 million in
severance costs for a previously announced reduction in headcount of
approximately 700 employees, and $14 million in asset and lease impairments, with
actions impacting all of the Company’s segments and most regions. Pre-tax savings
associated with these actions are expected to total $50 to $60 million in 2006,
increasing to a total of $65 to $70 million per year when fully implemented.
The Company anticipates additional restructuring actions in 2006, which
could result in further headcount reductions totaling an estimated 80 to 100
positions, with restructuring charges in the range of $10 to $15 million expected to
be incurred during the first half of 2006. These actions are expected to yield a
further $15 to $20 million in savings per year when fully implemented.
Pending divestitures include several non-strategic, low margin product lines.
Pre-tax costs recognized in the fourth quarter in connection with these divestitures
include $6 million in severance for a reduction in headcount of approximately 150
employees, and $83 million in non-cash charges associated with the impairment of
goodwill and other assets. [See Pending divestitures, below, for more information.]
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3. 3-3-3
A portion of the benefits from restructuring actions and divestitures will be
used to fund investments in ongoing Horizons initiatives and future growth
opportunities, as well as actions to drive additional productivity gains.
Other financial highlights from continuing operations for the fourth quarter of
2005:
• Sales declined by approximately 4 percent from the prior year to
$1.36 billion due to a reduction in unit volume. The unit volume reduction
reflected an extra week of sales which benefited the fourth quarter of the
prior year, as well as an increase in year-end orders by several large
customers in the Office and Consumer Products segment, which likewise
benefited the prior year.
Excluding the estimated benefit of the extra week and advance orders,
unit volume was comparable to the prior year.
• Gross profit margin improved by 10 basis points compared to the fourth
quarter of 2004, reflecting the benefits of pricing actions and productivity
gains, offset by the impact of lower sales, unfavorable segment mix, and
higher spending associated with the development of the Company’s radio
frequency identification (RFID) business.
Gross profit margin improved by 130 basis points compared to the third
quarter of 2005, reflecting favorable product mix. The benefit of product
mix was partially offset by sequentially higher raw material costs, which
the Company expects to mitigate with price increases during the first
quarter of 2006.
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4. 4-4-4
• Marketing, general and administrative expenses as a percent of sales
improved by 50 basis points compared to the same quarter a year ago,
reflecting spending controls implemented during the year.
• Excluding restructuring and asset impairment costs, gain on sale of a
leased asset, and a legal accrual related to a patent suit in the fourth
quarter of 2005, operating margin improved by 60 basis points over the
fourth quarter of 2004, due to improved gross profit margin and the
reduction in marketing, general and administrative expenses as a
percentage of sales. (See Attachment A-3: “Preliminary Reconciliation
of GAAP to Non-GAAP Measures”.)
• Continued improvements in the Company’s global tax structure reduced
the quarterly effective tax rate on income from continuing operations to
19.7 percent, while the tax effect of restructuring and divestiture-related
charges reduced the rate further to 2.4 percent, compared to 23.9 percent
in the same quarter a year ago.
Segment results from continuing operations
Sales for the Company’s Pressure-sensitive Materials segment declined by
approximately 3 percent from the prior year to $763 million due to a reduction in unit
volume, reflecting the extra week of sales which benefited the fourth quarter of the
prior year. Excluding the benefit of the extra week in the prior year, unit volume
increased by an estimated 1 percent.
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5. 5-5-5
Before the effects of restructuring and asset impairment costs and the legal
accrual, operating margin for the segment improved to 8.6 percent compared with
8.0 percent a year ago, reflecting productivity improvement initiatives and spending
controls. With the exception of cost inflation incurred during the fourth quarter of
2005, the benefit of price increases covered higher raw material costs. (See
Attachment A-4: “Preliminary Supplementary Information, Reconciliation of GAAP to
Non-GAAP Supplementary Information”.)
Sales for the Office and Consumer Products segment declined by
approximately 11 percent from the prior year to $293 million due to a reduction in
unit volume, primarily reflecting the extra week of sales and increased year-end
orders by large customers, both of which benefited the fourth quarter of the prior
year. Excluding these factors, unit volume declined by an estimated 3 percent.
Before the effects of restructuring and asset impairment costs, operating
margin for the segment increased to 22.4 percent compared with 19.7 percent a
year ago, reflecting the benefit of productivity improvement efforts, spending controls
and pricing. Price increases, effective January 1, 2005, have covered cumulative
raw material inflation for the segment over the past two years. (See Attachment A-4:
“Preliminary Supplementary Information, Reconciliation of GAAP to Non-GAAP
Supplementary Information”.)
Sales for the Retail Information Services segment declined by approximately
3 percent from the prior year to $170 million due to a reduction in unit volume,
reflecting the extra week of sales which benefited the fourth quarter of the prior year.
Excluding the benefit of the extra week in the prior year, unit volume was up slightly.
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6. 6-6-6
Before the effects of restructuring, asset impairment and lease cancellation charges,
operating margin for the segment increased to 8.0 percent in the fourth quarter,
compared with 7.0 percent a year ago, reflecting productivity improvement efforts,
including movement of production from Hong Kong to lower cost operations in
mainland China, as well as spending controls. (See Attachment A-4: “Preliminary
Supplementary Information, Reconciliation of GAAP to Non-GAAP Supplementary
Information”.)
Businesses in the Other Specialty Converting group reported sales of
approximately $138 million, up approximately 1 percent compared to the fourth
quarter of 2004 due to unit volume growth. Excluding the benefit of the extra week
in the prior year, unit volume increased by an estimated 5 percent. Before the
effects of restructuring and asset impairment costs, operating margin for these
businesses decreased to 1.7 percent from 2.1 percent a year ago, due to higher
spending related to the Company’s radio frequency identification (RFID) division,
partially offset by the benefit of productivity initiatives. (See Attachment A-4:
“Preliminary Supplementary Information, Reconciliation of GAAP to Non-GAAP
Supplementary Information”.)
Financial highlights for the year:
• Earnings per share, on a diluted basis, were $2.25, compared with $2.78
per share in 2004. Net income was $226.4 million, compared with
$279.7 million in 2004. Excluding restructuring and divestiture-related
charges and transition costs, the incremental tax expense associated with
the repatriation of earnings of certain foreign subsidiaries, expense
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7. 7-7-7
accrual related to a patent infringement case, and gain on sale of assets,
annual earnings per share and net income were $3.46 and $348.0 million,
respectively. On a comparable basis, earnings per share and net income
grew 13 percent. (See Attachment A-3: “Reconciliation of GAAP to Non-
GAAP Measures”).
• Reported sales from continuing operations grew approximately 3 percent
to $5.47 billion, compared with $5.32 billion in 2004.
• Excluding restructuring, asset impairment and plant transition costs, as
well as gain on sale of assets and an expense accrual related to a patent
infringement case, operating margin improved by 20 basis points
compared with 2004. (See Attachment A-3: “Reconciliation of GAAP to
Non-GAAP Measures”).
• The full-year effective tax rate on income from continuing operations was
20.4 percent, down 470 basis points compared with last year. The full-
year tax rate includes $14 million of incremental expense associated with
the repatriation of foreign earnings under the Homeland Investment Act;
this cost was more than offset by favorable global tax audit settlements of
$9 million in the third quarter of 2005, $7 million of restructuring-related tax
savings, as well as the benefit of geographic income mix and continued
improvements in our global tax structure. The 2004 tax rate included a
favorable tax audit settlement of $4 million in the second quarter of that
year.
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8. 8-8-8
Pending divestitures:
The Company is currently in discussions to sell a business consisting of
raised reflective pavement markers. The financial results for this business have
been included as discontinued operations. Sales for the approximately break-even
business were $23 million in 2005. Divestiture of this business would not impact the
Company's reflective films business; the Company will continue to manufacture and
market reflective films for the graphics and highway and traffic safety markets,
utilizing its proprietary glass beaded and microreplication technology.
In addition, the Company is also negotiating the sale of two product lines,
which would reduce annual sales by approximately $70 million, with minimal impact
to earnings from operations.
Outlook for 2006
Avery Dennison announced that it expects fully diluted earnings for 2006 to
be in the range of $3.45 to $3.80 per share. This range includes an estimated $0.12
per share impact from stock option expense, not included in 2005 reported earnings.
The Company’s expectation for stock option expense is below its previous estimated
range of $0.13 to $0.18 per share, following the finalization of its accounting
methodology.
The Company’s expected range in earnings excludes the impact of additional
restructuring charges related to plans that have not yet been finalized. Based on
plans to date, these charges could reduce full year earnings by $0.08 to $0.12 per
share; this range may increase as planning continues.
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9. 9-9-9
The Company’s earnings expectations reflect an assumption of reported
revenue growth from continuing operations in the range of 2 to 3 percent, including
an estimated 3 percent negative impact primarily from currency translation and
product line divestitures.
“Even though we faced a challenging business environment in 2005, we built
momentum through disciplined cost control and rigorous pricing execution,” said
Scarborough. “We will maintain that tight discipline going forward, driving solid
margin improvement in 2006, while simultaneously pursuing growth opportunities,
including expansion in the rapidly growing emerging markets, as well as new product
and service innovations out of our Horizons pipeline.”
“We are especially pleased with the progress we have made in developing
our RFID business this past year,” added Scarborough. “We continue to improve
the operating efficiency of our new high-speed manufacturing process, and are
seeing good traction with customers who are moving to the Gen 2 RFID chip
standard. We believe that we are very well positioned to achieve our market share
objectives as industry demand accelerates.”
Avery Dennison is a global leader in pressure-sensitive labeling materials,
office products and retail tag, ticketing and branding systems. Based in Pasadena,
Calif., Avery Dennison is a FORTUNE 500 company with 2005 sales of $5.5 billion.
Avery Dennison employs more than 22,000 individuals in 48 countries worldwide
who apply the Company’s technologies to develop, manufacture and market a wide
range of products for both consumer and industrial markets.
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10. 10-10-10
Products offered by Avery Dennison include Avery-brand office products and
graphics imaging media, Fasson-brand self-adhesive materials, peel-and-stick
postage stamps, reflective highway safety products, labels for a wide variety of
automotive, industrial and durable goods applications, brand identification and
supply chain management products for the retail and apparel industries, and
specialty tapes and polymers.
###
Forward-Looking Statements
Certain information presented in this news release may constitute “forward-looking” statements. These
statements are subject to certain risks and uncertainties. Actual results and trends may differ materially from
historical or expected results depending on a variety of factors, including but not limited to fluctuations in cost
and availability of raw materials; ability of the Company to achieve and sustain targeted cost reductions; foreign
exchange rates; worldwide and local economic conditions; selling prices; impact of legal proceedings, including
the U.S. Department of Justice (“DOJ”) criminal investigation, as well as the European Commission (“EC”),
Canadian Department of Justice, and Australian Competition and Consumer Commission investigations, into
industry competitive practices and any related proceedings or lawsuits pertaining to these investigations or to the
subject matter thereof (including purported class actions seeking treble damages for alleged unlawful competitive
practices, and purported class actions related to alleged disclosure violations pertaining to alleged unlawful
competitive practices, which were filed after the announcement of the DOJ investigation, as well as a likely fine
by the EC in respect of certain employee misconduct in Europe); impact of potential violations of the U.S.
Foreign Corrupt Practices Act based on issues in China; impact of epidemiological events on the economy and
the Company’s customers and suppliers; successful integration of acquired companies, financial condition and
inventory strategies of customers; development, introduction and acceptance of new products; fluctuations in
demand affecting sales to customers; and other matters referred to in the Company’s SEC filings.
The financial information presented in this news release represents preliminary financial results, but the audit has
not yet been completed. Under Section 404 of the Sarbanes-Oxley Act, integrated audit requirements will not be
met until the Company has completed all of the steps necessary to file these financial statements with the SEC.
The Company believes that the most significant risk factors that could affect its ability to achieve its stated
financial expectations in the near-term include (1) potential adverse developments in legal proceedings and/or
investigations regarding competitive activities; (2) the degree to which higher raw material costs can be passed
on to customers through selling price increases (and previously implemented selling price increases can be
sustained), without a significant loss of volume; (3) the impact of economic conditions on underlying demand for
the Company's products; and (4) ability of the Company to achieve and sustain targeted cost reductions.
For more information and to listen to a live broadcast or an audio replay of the
4th Quarter conference call with analysts, visit the Avery Dennison
Web site at www.investors.averydennison.com

11. Earnings Teleconference – Q4 2005
Forward-Looking Statements
Certain information presented in this news release may constitute “forward-looking” statements.
These statements are subject to certain risks and uncertainties. Actual results and trends may
differ materially from historical or expected results depending on a variety of factors, including
but not limited to fluctuations in cost and availability of raw materials; ability of the Company to
achieve and sustain targeted cost reductions; foreign exchange rates; worldwide and local
economic conditions; selling prices; impact of legal proceedings, including the U.S. Department
of Justice (“DOJ”) criminal investigation, as well as the European Commission (“EC”), Canadian
Department of Justice, and Australian Competition and Consumer Commission investigations,
into industry competitive practices and any related proceedings or lawsuits pertaining to these
investigations or to the subject matter thereof (including purported class actions seeking treble
damages for alleged unlawful competitive practices, and purported class actions related to
alleged disclosure violations pertaining to alleged unlawful competitive practices, which were
filed after the announcement of the DOJ investigation, as well as a likely fine by the EC in
respect of certain employee misconduct in Europe); impact of potential violations of the U.S.
Foreign Corrupt Practices Act based on issues in China; impact of epidemiological events on the
economy and the Company’s customers and suppliers; successful integration of acquired
companies, financial condition and inventory strategies of customers; development, introduction
and acceptance of new products; fluctuations in demand affecting sales to customers; and other
matters referred to in the Company’s SEC filings.
The financial information presented in this document represents preliminary financial results, but
the audit has not yet been completed. Under Section 404 of the Sarbanes-Oxley Act, integrated
audit requirements will not be met until the Company has completed all of the steps necessary to
file these financial statements with the SEC.
The Company believes that the most significant risk factors that could affect its ability to achieve
its stated financial expectations in the near-term include (1) potential adverse developments in
legal proceedings and/or investigations regarding competitive activities; (2) the degree to which
higher raw material costs can be passed on to customers through selling price increases (and
previously implemented selling price increases can be sustained), without a significant loss of
volume; (3) the impact of economic conditions on underlying demand for the Company's
products; and (4) ability of the Company to achieve and sustain targeted cost reductions.
Exhibit 1
Restructuring and Divestiture Summary
Pressure Office & Retail Other
Sensitive Consumer Information Specialty Corporate/
TOTAL Materials Products Services Converting Other
Restructuring (improve efficiency of ongoing operation)
Actions Taken or Underway:
Headcount reductions (approximate) 700 290 140 140 45 85
Q4 2005 severance charges ($ mil.) 27.9 15.3 2.9 5.6 1.2 2.9
Q4 2005 asset impairment charges ($ mil.) 13.5 2.5 3.7 1.5 1.2 4.6
Projected Annualized Savings ($ mil.) 65 - 70 16 - 18 5-6 5-7 3-5 ~ 35
Restructuring Actions in Planning Stages:
Headcount reductions 80 - 100
2006 projected restructuring charges ($ mil.) 10 - 15
Projected Annualized Savings ($ mil.) 15 - 20
Product Line Divestitures
Headcount reductions (approximate) 150
Q4 2005 severance charges ($ mil.) 5.7
Q4 2005 asset impairment charges ($ mil.) 8.7
2005 annual sales ($ mil.) (break-even operating profit) ~ 70
Discontinued Operations
Q4 2005 asset impairment charges ($ mil.) 74.4 74.4
2005 annual sales ($ mil.) (break-even operating profit) 23 23
SUMMARY:
Total Cash Charges ($ mil.) 43 - 48
Total Non-Cash Charges ($ mil.) 97
Total Annualized Savings When Complete ($ mil.) 80 - 90
Estimated 2006 Savings Realized ($mil.) 50 - 60
2006 estimated transition costs ($ mil.) 15 - 20 9 - 12 4-5 1-2
Estimated 2006 Savings, Net Of Transition Costs ($mil.) 35 - 40
1

12. Earnings Teleconference – Q4 2005
Exhibit 2
Sales Growth
10.5% *
Estimated Core
Volume Growth Q4-05 Adjusted
2.2% .
Volume
1.0%
Growth = 0%
Q4-04 Q1-05 Q2-05 Q3-05 Q4-05
-1.0%
-4.6% *
Acquisitions, Net of
Divestitures 0.5% 0.4% 0.6% 0.3% 0.0%
Price/Mix + 2% + 2% + 2% + 2% + 1%
Currency 3.7% 2.9% 3.2% 0.8% -0.6%
Reported Sales 17% 8% 7% 2% - 4%
* Estimated impact of extra week of sales, pre-buy activities, and timing of holidays represented by unshaded box.
Margin Analysis
Exhibit 3
(excl. restructuring charges and transition costs, asset impairment charges, and gain on asset sales)
Q4-05 Q4-04 Q3-05
Gross Profit Margin (Total Company) 30.4% 30.3% 29.1%
Operating Margin*:
Pressure-Sensitive Materials 8.6% 8.0% 9.0%
Office and Consumer Products 22.4% 19.7% 15.1%
Retail Information Services 8.0% 7.0% 7.2%
Other Businesses 1.7% 2.1% 5.1%
Total Company 9.4% 8.8% 9.5%
Impact of RFID on reported margin: (0.7)% (0.6)% (0.6)%
Total Company Excluding RFID 10.1% 9.4% 10.1%
* Earnings before interest and taxes divided by net sales
2

13. Earnings Teleconference – Q4 2005
Exhibit 4
Key Factors Impacting Margin
• Gross profit margin up 10 basis points compared to prior year, and 130 basis
points sequentially
– Productivity gains offset by:
» Margin compression effect associated with pass-through of raw material
inflation (price increases largely covered raw material inflation)
» Unfavorable segment mix
» Higher energy costs
» Higher spending for development of RFID business
– Sequential improvement reflects favorable segment and product mix and
productivity improvement, partially offset by higher fuel and raw material costs
• Marketing, general and administrative (MG&A) expenses, expressed as a
percentage of sales, declined by 50 basis points compared to the prior year
but increased by 140 basis points sequentially
– Compared to prior year, absolute MG&A spending decreased by approximately
$20 million
» Approx. half of the decline due to lower volume, currency translation, and
unusually high expenses in prior year
» Balance reflects productivity improvements and tight spending controls
which more than offset higher pension/medical costs and wage inflation
– Sequentially, MG&A expenses increased by approximately $21 million, in line
with guidance
Exhibit 5
Raw Material Update
• Paper is biggest category of raw materials, representing approx.
45-50% of total spend
• Large share of raw material purchases tied to oil based
commodities:
– Plastic films and resins – polypropylene, polyethylene, polyester,
and vinyls, among others – represent approx. 25% of total spend
– Chemicals represent approx. 15% of total spend
• Experienced inflation across most commodities this year, with
chemicals – adhesives, in particular – increasing the fastest. In
the aggregate, raw materials increased by about $100 million in
2005, or roughly 4 percent
• Post-hurricane supply shortages increased the pressure on cost
in North America during the fourth quarter
– Absorbed about $3.5 million of sequentially higher raw material cost
in the fourth quarter; expect continued inflation in 2006
• Currently raising prices to cover new inflation
3

14. Earnings Teleconference – Q4 2005
Exhibit 6
Reconciliation of Q4 Tax Rate
Tax Structure Q4 Results,
Millions, except as
Q4 Results at Improvements Results from Net of
noted
expected rate & Other Operations Restructuring Restructuring
Pretax Income, cont.
$115.4 $115.4 ($56.9) $58.5
ops
Tax Expense $26.0 ($3.3) $22.7 ($21.3) $1.4
Effective Tax Rate 22.5% 19.7% 37.5% 2.4%
Exhibit 7
Q4-2005 Sector Overview
PRESSURE-SENSITIVE MATERIALS
• Reported sales declined approximately 3%
– Adjusting for the extra week of sales in 2004, unit volume increased by
approx. 1%, a slight improvement over Q3
– Price and mix were favorable, up approx. 1%, but offset by the negative
effect of currency translation
• Change in sales for roll materials business by region, adjusted for
currency effects and impact of extra week in 2004:
– Approx. 6% decline in North America, where benefit of price increases
was more than offset by a decline in volume
– Approx. 8% growth in Europe, with Eastern markets growing better
than 20%
– Double-digit growth in Asia
– Modest decline in Latin America
• Excluding restructuring and asset impairment charges and legal
accrual related to patent lawsuit, operating margin improved by 60
basis points year-on-year due to productivity improvement initiatives
and spending controls; margin declined by 40 basis points
sequentially due to raw material inflation and other costs
4

15. Earnings Teleconference – Q4 2005
Exhibit 8
Q4-2005 Sector Overview (continued)
OFFICE AND CONSUMER PRODUCTS
• Reported sales declined by approximately 11%
– Adjusting for the extra week of sales in 2004 and the increased
year-end orders by large customers, unit volume declined by an
estimated 3%
– Benefit of price and mix was largely offset by negative currency
translation
• Excluding restructuring and asset impairment charges, operating
margin increased by 270 basis points compared to the prior year,
reflecting productivity improvement and expense control
– January 1, 2005 price increase covered cumulative raw material
inflation incurred over past two years
• Sequential margin comparison not meaningful, due to effect of
normal seasonality
Exhibit 9
Q4-2005 Sector Overview (continued)
RETAIL INFORMATION SERVICES
• Reported sales declined by approximately 3%
– Adjusting for extra week of sales in 2004, unit volume increased slightly
compared to prior year, reflecting strong orders in 2004 ahead of apparel
manufacturing quota elimination
– Effects of price/mix, acquisitions, and currency were all negligible
• Excluding restructuring charges, operating margin increased by 100 basis points
compared to prior year
– Year-on-year improvement reflects productivity initiatives, including movement
of manufacturing from higher cost Hong Kong facility into recently expanded,
lower cost facilities in mainland China, as well as spending controls
– Sequential margin comparison not meaningful, due to effect of normal
seasonality
OTHER
• Reported sales up approximately 1%; adjusting for the extra week in 2004, unit volume
increased by an estimated 5%
• Operating margin declined by 40 basis points compared to prior year, due to higher
RFID spending, partially offset by productivity improvement in other businesses.
Sequentially, margin declined by 340 basis points due to product mix within the
segment and increased RFID spending
5

16. Earnings Teleconference – Q4 2005
Exhibit 10
Fourth Quarter Balance Sheet and Cash Flow
Millions, except as noted 2005 2004
(1)
Cash flow from operations $ 444.7 $ 512.6
Payment for capital expenditures $ 162.3 $ 177.3
Payment for software $ 25.8 $ 21.8
(2)
Free Cash Flow $ 256.6 $ 313.5
Share repurchase $ (40.9) $ (0.7)
Dividends $ 168.7 $ 164.6
Total debt to total capital 41.8% 43.9%
(1)
Week 53 impact shifted an estimated $70 mil. of cash out of 2005 into 2004
(2)
Cash flow from operations less payment for capital expenditures and software
2006 Earnings Guidance:
Exhibit 11
Key Considerations
• Factors contributing to earnings growth:
– Improvement in underlying growth rate… projecting reported
revenue growth (continuing operations) of 2-3%
» Volume up 2-3%, net of 2 points loss from product line
divestitures and other offsets
» Price/mix expected to add 1%
» Currency translation at current rates will reduce growth by 1%
– Estimated $35 to $40 mil. in pre-tax restructuring savings, net of
transition costs
– Reduction in pre-tax loss from development of RFID business of
roughly $5 mil.
• Offsetting factors:
– After-tax stock option expense of $0.12 per share
– Incremental after-tax pension expense (related to discount rate) of
$0.05 per share
– Reinvestment of portion of restructuring savings (e.g., incremental
marketing spend of $10 to $15 mil. to support growth of Printable
Media products)
– Higher effective tax rate
6

17. Earnings Teleconference – Q4 2005
Exhibit 12
2006 Earnings Guidance
• Key Assumptions:
– Reported revenue up 2% to 3%, including -1% impact from currency
(Q1 impact from currency estimated at -2% to -3%)
– Operating margin (incl. RFID and stock option expense) of 9% to 10%
– Interest expense of $55 to $60 million
– Tax rate in the range of 20% to 23%
– Earnings per share before restructuring charges: $3.45 to $3.80
– Current estimate for restructuring charges: $0.08 to $0.12 per share
(subject to upward revision as planning continues)
• Seasonal considerations… Q1 generally represents about 20% of full
year earnings; expect it to be disproportionately lower as percentage
of full year guidance, due to timing of restructuring-related transition
costs and savings
• Accounting change in 2006… reclassifying approximately $30 million
of freight and distribution expenses from MG&A to Cost of Sales
(historical financials will be restated for comparability)
7